Post Office Senior Citizen Savings Scheme (SCSS)

Over the past few decades, the Indian government has launched several government-backed savings schemes for citizens of India. Many of these schemes have been launched through the Department of Posts. Known collectively as the Post Office Savings Schemes, there are many investment channels that the postal department offers retail investors in India.

Some of the most popular schemes and financial products offered by the Indian Postal Department include the following –

• National Savings Monthly Income Account(MIS)
• Public Provident Fund (PPF)
• Sukanya Samriddhi Account
• National Savings Certificates (VIIIth Issue) (NSC)
• Kisan Vikas Patra(KVP)

Apart from these special schemes, the Department of Posts also offers a fixed deposit scheme, known as the National Savings Time Deposit (TD).

The interest rates on deposits made under the National Savings Time Deposit scheme are the same for account holders who are below or above 60 years of age. Check out the interest rates on Post Office FDs below.

So, if you are a senior citizen who is planning to open a fixed deposit account with the Indian Postal Department, you will earn interest at the rate of 5.50% per annum for deposits with tenures up to 3 years. If you choose a 5-year investment tenure, you can earn higher interest at the rate of 6.70% per annum.

Apart from the interest rates outlined above, Post Office fixed deposits also come with many other defining features and benefits. Let us take a closer look at each of these characteristics below. If you are a senior citizen planning to open a Post Office FD Account, or if you are planning to do so for your senior citizen parent or relative, knowing these features can help you with your investment planning.

• Minimum and maximum amount
  The minimum amount needed to open an FD account with the Post Office is ₹1,000. The deposit amount can be increased in multiples of ₹100. However, there is no maximum limit on the amount you can deposit.
• Number of accounts permitted
  You can make only one deposit per FD account under the National Savings Time Deposit scheme. However, there is no limit on the number of accounts you can open under this scheme.
• Interest calculation and payout
  The interest is calculated at the applicable rate of interest on a quarterly basis. However, it is only paid out annually. Also, if your annual interest has been paid out into your account, but you have not withdrawn the same, you will not receive any additional interest on that interest amount.
  
  In other words, interest is only calculated on the deposit amount. You do not earn interest on interest.
• Investment tenure
  There are four investment tenures that you can choose from. These are listed below.
  • 1 year FD
  • 2 year FD
  • 3 year FD
  • 5 year FD
• Tax benefits
  5-year fixed deposits qualify for tax benefits² under section 80C of the Income Tax Act, 1961. The amount you deposit in your account is deductible from your total taxable income, up to ₹1.5 lakhs.
• Extension of your FD account
  Once your FD has matured, you can extend the investment further, by the same period for which you initially opened your fixed deposit account. For instance, if you opened your FD account for a 2-year deposit, you can extend the investment tenure by 2 more years at maturity.
• Premature closure of your FD account
  Premature withdrawal of your fixed deposit investment is permitted only 6 months after the date of deposit.

Senior citizens get to enjoy many financial benefits by including a Post Office fixed deposit account in their investment portfolio. If you are someone above 60 years of age, or if you are planning to open a Post Office FD, here is how it can benefit you.

• Guaranteed interest
  You can earn guaranteed¹ interest on the amount you deposit in your account. This will help you limit or lower the risk in your portfolio, which is very essential after you have retired.
• Capital preservation
  Once you are past the age of 60, your financial priority should be capital preservation rather than capital appreciation. Post Office FDs help you achieve this goal by keeping your capital intact.
• Annual income
  The interest earned on your deposit is paid out annually. This can act as a source of annual income for you in your post-retirement life.
• Tax savings
  You can also save tax by claiming a deduction equal to the amount deposited, up to ₹1.5 lakhs. This can help reduce the tax burden.

If you are not yet over the age of 60, but are looking for other investments and financial products to invest a lump sum of money in a risk-free manner, you can even consider saving life insurance plans. The ABSLI Fixed Maturity Plan is one such plan that gives you the dual benefits of insurance and guaranteed¹ savings.

With single premiums starting at as low as ₹12,000, this plan gives you the benefit of a life cover coupled with guaranteed¹ returns up to 7.03%^. Plus, you get tax benefits² on your premium under section 80C of the Income Tax Act, 1961, and you can rest assured that your loved ones are financially protected.